Which one of the following provides the right to sell a stock anytime during the option period at the strike price even if the market price of the stock declines to zero?
A)American call
B)European call
C)American put
D)European put
E)Should the underlying stock price decline to zero,all options are null and void.

Question

Quizplus · Accepted Answer

An American put option provides the right to sell the stock at the strike price anytime during the option period. This means that even if the market price of the stock declines to zero, the holder of the American put option can still sell it at the strike price. In contrast, European options can only be exercised at expiration, which means the holder cannot take advantage of market movements during the option period. American and European calls give the right to buy the stock at the strike price, not to sell it. Option contracts are independent of the underlying stock, so they would still have value if the stock goes to zero. Thus, option contracts would not be null and void if the underlying stock price declines to zero.

Which One of the Following Provides the Right to Sell